Delta Pty Ltd v Whitefield

LOWER COURT District Court JURISDICTION : LOWER COURT 9797/2002 FILE NUMBER(S) : LOWER COURT Phegan DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40704/03

Handley JA Sheller JA Cripps AJA

Tuesday 6 July 2004 DELTA PTY LTD v DONNIE WHITEFIELD Judgment

1 HANDLEY JA: I agree with Cripps AJA. 2 SHELLER JA: I agree with Cripps AJA.

3 CRIPPS AJA: This is an application for leave to appeal from a decision of Phegan DCJ published on 25 July 2003 granting the opponent an extension of time pursuant to s 60C of the Limitation Act 1969 to sue the claimant in negligence. 4 A cause of action founded on negligence is not maintainable if brought after the expiration of the limitation period of three years from the date on which the cause of action first accrues (s 18A Limitation Act) unless the Court extends the limitation period. 5 Section 60C relevantly provides that if application is made to a court by a person claiming to have a cause of action in negligence the court - " after hearing such of the persons likely to be affected by the application as it sees fit, may, if it decides that it is just and reasonable to do so, order the limitation period for the cause of action be extended for such period, not exceeding 5 years, as it determines."

Section 60E of the legislation provides: "(1) In exercising the powers conferred on it by section 60C …, a court is to have regard to all the circumstances of the case, and (without affecting the generality of the foregoing), the court is, to the extent that they are relevant to the circumstances of the case, to have regard to the following: (a) the length of and reasons for the delay, (b) the extent to which, having regard to the delay, there is or may be prejudice to the defendant by reason that evidence that would have been available if the proceedings had been commenced within the limitation period is no longer available, (c) the time at which the injury became known to the plaintiff, (d) the time at which the nature and extent of the injury became known to the plaintiff, (e) the time at which the plaintiff became aware of a connection between the injury and the defendant's act or omission, (f) any conduct of the defendant which induced the plaintiff to delay bringing the action, (g) the steps (if any) taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice the plaintiff may have received, (h) the extent of the plaintiff's injury or loss."

6 The opponent was injured when undertaking demolition work on the site of the Capitol Theatre Haymarket on 6 December 1994 when he was struck on the head by a piece of lead flashing which had fallen from above. He was employed by Gillespie Crane Nominees Pty Ltd (Gillespies). The head contractor on the site was Fletcher Constructions Pty Ltd (Fletchers) and the claimant Delta Pty Ltd was a sub-contractor which had engaged the services of Gillespie for the provision of a crane and a dogman being the opponent. 7 The three-year limitation period expired on 6 December 1997. The opponent made application by notice of motion to extend the limitation period on 5 December 2002 just one day short of the five-year period within which the limitation period could be extended and almost eight years after the accident. 8 The application was heard by the learned District Court Judge on 17 April 2003 and the 25 July 2003. At the conclusion of the hearing the learned trial judge, without reserving, published a lengthy judgment. His Honour extended the limitation period to 5 December 2002 a day on which the opponent had filed a statement of claim in the District Court. 9 Phegan DCJ found that the opponent was ignorant of his legal rights and did not understand advice given to him by his solicitor and two barristers prior to the expiration of the limitation period concerning his entitlement to take common law proceedings against the claimant. The claimant conceded that if the case went to trial it could point to no forensic prejudice. However it submitted it suffered significant prejudice by reason of the circumstance that it had no public liability indemnity cover. Had the claim been brought within the limitation period or within a short period thereafter the claimant would have been indemnified by its public liability insurer HIH Insurance. HIH Insurance ceased business in March 2001 by which time, had the opponent brought his case and secured a favourable verdict (which almost certainly would have happened) the verdict and costs that would have been ordered to be paid would have been paid by the insurance company. 10 The claimant also submitted that a significant circumstance of the case was that the opponent "elected" in effect to retain the workers compensation entitlement he had from Gillespies and not to pursue a common law claim against the claimant and that his "election" followed competent legal advice. (See Itek Graphix Pty Ltd v Elliott (2002) 54 NSW LR page 207). 11 After his injury the opponent remained off work for a considerable period of time during which he was paid worker's compensation. He had been referred by his Union to Steve Masselos Solicitors a firm specialising in industrial accident cases. Mr Masselos sought advice from Mr Bartley concerning the opponent's entitlement to common law damages. The opponent had a conference with Mr Bartley and Mr Masselos on 26 July 1995. His wife was also present. Mr Bartley recorded the advice given in a Memorandum of Advice which was tendered in evidence. In it Mr Bartley opined that the opponent should commence common law proceedings against the claimant and Fletchers. Moreover he referred to the circumstance that a common law claim had to be commenced prior to 5 December 1997. In his advice Mr Bartley canvassed the possibility of also suing Gillespies and referred to the decision of the High Court in Kondis v State Transit Authority (1984) 154 CLR 672 in which it was held that an employer such as Gillespies had a non delegable duty to take reasonable care for the safety of its employees. However Mr Bartley was also of the view that liability was not absolute and he found it difficult to see what Gillespies could have done to have avoided the injury. Mr Bartley settled an appropriate statement of claim for common law damages pursuant to the advice he gave. 12 The opponent said in evidence that he did not want to sue Gillespies because he did not think it had done anything wrong. However beyond claiming that he did not fully understand this advice he did not satisfactorily rebut the clear inferences deriving not only from Mr Bartley's advice but also from advice contained in three letters from Mr Masselos. 13 The first was on 7 August 1995 in which Mr Bartley's advice was forwarded and the opponent was told that Mr Bartley had advised that he should commence proceedings against the claimant Delta. He was asked to attend Mr Masselos' office and discuss the advice. 14 On 15 August 1995 Mr Masselos again wrote to the opponent and said: "We refer to your recent attendance at this office and confirm your instructions that you prefer to elect to pursue your entitlements pursuant to sections 66 and 67 of the Workers Compensation Act rather than pursue any claim for damages for negligence against Delta Demolitions and Fletchers." 15 On 19 October 1995 Mr Masselos again wrote to the opponent: "We refer to our letter of 12 September 1995 and to your instructions to "elect" to pursue your entitlements pursuant to the provisions of sections 66 and 67 of the Workers Compensation Act 1987 as amended rather than seeking to institute proceedings under the common law for the recovery of damages of negligence for the injury sustained by you on December 6th 1994. We note that these instructions were given to us in person on 14 August 1995 when the effect of "electing" to take your entitlements pursuant to sections 66 and 67 in lieu of taking action for the recovery of damages was discussed in detail with yourself and your wife and wherein you both indicated that you clearly understood the implications of taking that course.

Should you have any inquiries or any doubts about your entitlements as a result of the "election" which you have made please do not hesitate to communicate with the writer by way of telephone or by way of attendance at our office by way of appointment." (A reference to 12 September 1995 was probably a reference to the letter of 15 August 1995 - but nothing turns on this). 16 In early 1997 the opponent made an application for a lump sum payment of money from Gillespies pursuant to the provisions of the Workers Compensation Act. On this occasion Steve Masselos and Co retained Mr Mooney, Barrister. Much of his advice was directed to the evidence needed for the workers compensation case. However in it Mr Mooney said: "Consideration must also be given as to whether or not proceedings should be commenced for Common Law damages against the owner and occupier of the building which he was working on at the time of the accident (ie the Capitol Theatre site Campbell Street Haymarket). There is obviously negligence on behalf of either the occupier or the sub-contractor working".

He made reference to the possibility of obtaining an investigation report from WorkCover and in conclusion he said: "Once those documents are produced in Court decisions can be made in relation to the conduct of the sections 66/67 proceedings against the employer and also Common Law proceedings against the responsible party as mentioned above."

17 On 27 February 1997 the opponent gave instructions for his lawyer to accept the sum of $40,000 pursuant to the provisions of the Workers Compensation Act. Included in it in handwriting which was signed by the opponent and witnessed was the statement: "I instruct you and acknowledge that I have received advice in respect of my potential Common Law rights against the occupier and/or Fletcher Constructions and Delta Demolitions together with the potential risks of such action if it is found that any negligence was attributable against my employer Gillespie Crane Services." 18 On 22 April 1999 Mr Mooney prepared a Memorandum of Advice after conferring with the opponent on 8 April 1999. Mr Mooney foreshadowed that if the opponent wished to take common law proceedings an application would have to be made to the Court pursuant to s 60C of the Limitation Act. He seemed to think that the application had to be made before December 1999 and not December 2002 but nothing turns on this. Mr Mooney suggested that a successful action against Delta would be in the interests of Gillespies workers compensation insurer, the GIO. He suggested that the solicitors for Gillespies should be asked whether they would fund the opponent's application for an extension of time and indemnify him in respect of any possible cost order. 19 Mr Mooney had a further conference with the opponent and his wife on 19 July 1999. In it he said: "I have carefully explained to Mr Whitefield the proposal of making a claim for damages against Delta Constructions Pty Ltd. I have explained to him that he would need to bring an application for leave to proceed out of time pursuant to s 60 of the Limitation Act. …

Later he said: "The critical question of course is whether or not this man is best to remain on his workers compensation benefits or alternatively sue for damages. In respect of his present entitlements I note that he is presently being paid $380.80 per week by way of weekly payments of compensation. He has of course had section 66/67 benefits of not less than $40,000." 20 Thereafter Mr Mooney set out the advantages and disadvantages of making a common law claim. As at July 1995 the opponent had returned to work. Mr Mooney estimated that if he commenced common law proceedings it was probable he would receive between $150,000 and $200,000 clear. In his advice he said: "It may well be that this man is best left on his workers compensation benefits. I believe that a computation figure which would be approved by the court would be not less than $150,000. It can therefore be seen that the benefits in bringing the action for damages are marginal when one considers such aspects as the solicitor/client costs and any other costs associated with the trial." 21 Later Gillespies took proceedings against Delta. The opponent was called as a witness. Judgment was given by Judge O'Reilly QC on 5 October 2001. The opponent gave evidence and was described by Judge O'Reilly QC as "being content to remain on workers compensation". The learned trial judge made a finding of negligence by Gillespies and Delta and held that the opponent was not guilty of contributory negligence. His Honour thereupon found that because of a non-delegable duty owed by Gillespies to the opponent he had a common law claim against Gillespies as well as Delta and apportioned responsibility 65 percent against Delta and 35 percent against Gillespies. 22 At some time during 2001 the opponent was advised by a member of the firm Hunt and Hunt then acting for the insurer of Gillespies to see another solicitor. There is no explanation as to why nothing further was done by the opponent in pursuit of his common law claim until December 2002. 23 The learned judge in the course of reaching his conclusion said: "At the time of the expiration of the limitation period there was no particular attention drawn to the fact that the three year period was about to expire. I accept that a particular reason for that was in the apparent instructions which had been given earlier that the applicant, at least at that stage, that is in 1995 had decided not to press any action against the respondent. However, more to the point was the fact that insofar as any such prospect was still a live one, it was not one which had any forensic impetus because of the continuing failure, or, refusal, of the workers compensation insurer to make the investigation report available. In other words it is reasonable to infer that at the crucial time when the limitation period was about to expire the possibility of a common law claim if it ever proved to be forensically desirable was not explicitly addressed because there was still no report available upon which such a claim could be reasonably grounded." 24 Bearing in mind the uncontradicted evidence of the advice presented to the opponent in 1995 and 1997 and the letters written to the opponent by Steve Masselos & Co referred to above it is difficult to see how, beyond descending into pure speculation, the learned trial judge could have made the finding referred to above. The opponent's wife did not give evidence. 25 His Honour appears to have attached some importance to the absence of an investigation report. In fact WorkCover never investigated the accident and did not prepare a report. This was known to the opponent and his legal advisers in 1995. The report that later became available to the opponent in 1998 after the expiration of the limitation period was the report obtained by Gillespies. The decisions made by the opponent were made against the background of legal advice that he had a good case against Delta. In fact in my respectful opinion it was not open to the learned trial judge to infer that the decision not to commence proceedings prior to the expiration of the limitation period had anything to do with the absence of an investigator's report. 26 The opponent never said he was awaiting the report. Mr Masselos and Mr Bartley attached no significance to the absence of a WorkCover report beyond, in the case of Mr Bartley, expressing a suspicion that WorkCover, also the insurer of Delta, may have had some improper motive in not properly investigating the claim. The clear inference, in my opinion, from the evidence is that the opponent understood he had a good common law case against Delta but "elected" to remain on workers compensation and, bearing in mind the advice tendered by Mr Mooney that was not an unreasonable stance to take. 27 The learned trial judge's attention was drawn to Itek Graphix. In Itek Graphix the Court held that a significant matter to be taken into account when an application is made to extend the limitation period is the deliberate decision taken by the applicant after receiving full legal advice not to pursue a common law remedy. The learned trial judge sought to distinguish Itek Graphix. There were, of course, different facts in both cases. However in both cases lack of forensic prejudice was conceded. In Itek Graphix the choice was between proceeding with a workers compensation claim and proceedings against the employer at common law whereas in the present case the choice was between remaining on workers compensation and pursuing a common law claim against a third party. In my opinion, Itek Graphix stands for the proposition that it will be a highly relevant circumstance in determining whether to extend the limitation period that, after getting proper legal advice, the applicant decided not to take proceedings. Although the learned judge recognised this proposition he failed to attach any importance to it. 28 The learned trial judge's attention was also directed to the claim of the claimant that had the action been brought in time it would have been wholly indemnified both as to damages and costs by its public liability insurer. As I have said had the opponent sued Delta at common law the prospects of success were very good. His Honour was referred to a decision in the Tasmanian Supreme Court Ashton v Benders [2002] TASSC 68 where a similar argument was accepted by Crawford J. The learned trial judge said:

"However in acknowledging the judgment in that case I make two observations. One is that with all due respect to his Honour, I am not entirely persuaded that matters other than matters going to forensic prejudice should properly be taken into account in an application of this kind." 29 Later his Honour said: "In those circumstances the case is of limited assistance and therefore I am not persuaded that given the absence of any other authority, that loss of insurance alone should be a basis on which I should find that the respondent suffered prejudice of a kind sufficient to entitle the respondent to have the application refused." 30 In my respectful opinion the loss of public liability indemnity was highly relevant to the exercise of the Court's discretion in the circumstances of the case. Accepting that insurance prejudice is not a matter to be considered under s 60E(1)(b) (which appears to be directed to "forensic" prejudice), it was, in my opinion, a significant "circumstance of the case" (within the opening words of subsection (1)).

31 In Schering-Plough Pty Ltd v Page (2002) NSWCA 4 Sheller JA emphasised the importance of addressing each of the matters referred to in s 60E(1). In the present case the learned trial judge did not refer to s 60E(1) either generally or in terms. It was submitted by Mr Rewell SC on behalf of the opponent that bearing in mind that the decision was given ex tempore one should not conclude that the discretion was not properly exercised simply because s 60E(1) was not addressed in terms. I would agree with this submission if it were otherwise clear that the learned trial judge had properly addressed the matters in s 60E(1). However I do not think he did. In Schering-Plough Sheller JA said: "In approaching an application for an extension of the limitation period under s 60C(2) the Court must take into account all of the circumstances of the case including each factor mentioned in s 60E(1) to the extent that it is relevant to the circumstances of the case ( Sydney City Council v Zegarac (1998) 43 NSWLR 195 at 199). In doing so the Court should be mindful of the matters referred to in the judgment of Gleeson CJ in Salido v Nominal Defendant (1993) 32 NSWLR 524 at 532-3. The discretion conferred upon the Court is to be exercised judicially in a manner that furthers the purpose of the statutory context, the immediate purpose, as with any limitation period being to protect defendants against the injustice of stale claims and to promote forensic diligence. Bearing those matters in mind the question is whether in the circumstance of each individual case the applicant for leave has demonstrated that it is just and reasonable that leave be granted. The diligence or lack of diligence shown by the plaintiff or the plaintiff's representatives in ascertaining his or her rights will ordinarily be a material factor, as will the extent of the relevant delay and reason for it. The nature and extent of any forensic disadvantage to the defendant resulting from the plaintiff's delay will also be material. The effect, if any, of the delay upon the defendant's ability to defend an action is a matter to be taken into account, and may in some cases be of decisive importance."

32 The learned trial judge was bound to have regard to all the circumstances of the case and, to the extent they were relevant to the circumstances of the case, the matters listed in s 60E(1)(a) to (h). The trial judge recognised there would be no "forensic" prejudice to the claimant should the matter proceed (s 60E(1)(b)). However there was no adequate reason for the delay other than that the opponent, being fully advised, decided not to commence proceedings against Delta (s 60E(1)(a)). The plaintiff knew of his injury at the time it happened (s 60E(1)(c)) and the extent of his injury shortly afterwards (s 60E(1)(d)). By mid 1995 he was aware of the connection between his injury and Delta's act or omission (s 60E(1)(e)). Delta did not induce the opponent to delay bringing the action (s 60E(1)(f)). Finally the opponent was fully advised concerning his common law entitlements (s 60E(1)(g)). A not insignificant feature of the reasons of the learned trial judge is his failure to even mention the letter of 19 October 1995 in which his solicitors confirmed the instructions he had given to them to "elect" to claim workers compensation benefits "rather than seek to institute proceedings under common law…..".

33 In my opinion the learned trial judge's discretion miscarried and I would propose that: 1 Leave to appeal be granted. The claimant's notice of appeal, if not already filed, to be filed within 14 days. 2. Appeal upheld.

4. In lieu thereof order that the opponent's notice of motion of 5 December 2002 be dismissed.

5. The opponent to pay the claimant's costs of the proceedings before Phegan DCJ and this Court on appeal.

6. The opponent to receive a certificate under the Suitors Fund Act .

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